North Korea said the U.S. and South Korea are “inviting a nuclear war” by conducting military drills, even as a Seoul-based think tank predicted that Kim Jong Il’s regime may hold another atomic test next year.

South Korea’s Dec. 20 artillery drill on Yeonpyeong Island near the disputed sea border was an intentional provocation, and North Korea is closely watching “the reckless behavior of the warmongers inviting a nuclear war,” the communist country’s state-run Korean Central News Agency said today, citing commentaries in the Rodong newspaper.

The comments follow a threat North Korea made yesterday to wage a “sacred war” using nuclear weapons if attacked. North Korea may conduct a third nuclear test next year as it needs to refine its plutonium bomb, South Korea’s state-run Institute of Foreign Affairs and National Security said in a report posted on its website yesterday.

North Korea has repeatedly claimed that military maneuvers by South Korea and the U.S. are preparations for a full-scale invasion. The regime is “fully prepared to launch a sacred war of justice of Korean style based on the nuclear deterrent,” KCNA reported yesterday, citing Kim Yong Chun, the minister of its People’s Armed Forces.

Retaliation to any further attack by the north would include airstrikes, South Korea’s Defense Minister Kim Kwan Jin said Dec. 3.

South Korea held an artillery drill on Yeonpyeong Island on Dec. 20, the first live-firing exercise on the island since last month. Tensions on the Korean Peninsula have increased since North Korea shelled the island on Nov. 23, killing two soldiers and two civilians.

The south conducted another one-day exercise on Dec. 23 involving jet fighters, mobile artillery and about 800 troops in an area between Seoul and the Demilitarized Zone that separates the nation from its communist neighbor. Both drills ended without retaliation from the north.